Aon has reached an agreement to buy rival Willis Towers Watson for about $30bn in an all-stock deal, the companies announced.
The deal between the two will create one of the world's largest insurance brokers, with a combined value of approximately $80bn. Willis Towers Watson shareholders will receive 1.08 Aon shares for every Willis share they own. That values Willis Towers Watson's equity at $30bn, a 16% premium to Friday's closing price.
"The combination of Willis Towers Watson and Aon is a natural next step in our journey to better serve our clients in the areas of people, risk, and capital," Willis Towers Watson chief executive officer John Haley said in a statement.
The combination of Willis Towers Watson and Aon is a natural next step in our journey to better serve our clients in the areas of people, risk, and capital"
The companies said the deal will result in pre-tax synergies and other cost reductions of $800m by the third full year. It will produce more than $10bn in shareholder value, net of $2bn in one-time transaction, retention, and integration costs, they said.
"This combination will create a more innovative platform capable of delivering better outcomes for all stakeholders, including clients, colleagues, partners and investors," Aon chief executive Greg Case said.
Aon, which is incorporated in England and Wales, and Ireland-based Willis Towers operate across sectors, focusing on areas such as advising on employment benefit plans, as well as providing property and liability brokerage services, health and benefit solutions and investment management consulting services through risk underwriting and reinsurance brokering.
The new company will be named Aon, with headquarters in London.
The transaction is subject to the approval of the shareholders of both Aon Ireland and Willis Towers Watson, as well as other customary closing conditions, including required regulatory approvals. The deal terms state Aon will have to pay $1bn to Willis if the deal falls through.
The deal is expected to close in the first half of 2021.